Unprecedented Central Bank Collusion Allows Troubled Institutions to Borrow Emergency Funds in Secret
December 15th, 2007What you don’t know can’t hurt Them.
Via: Telegraph:
The crucial elements in the Fed’s move yesterday is not so much the sum of money on offer – $20bn next week, $20bn the week after – but that all depository banks in America can draw from the tap anonymously, without the risk of being found out.
“People looked at what happened to Northern Rock in Britain and said we’re not going to risk that, so hardly anybody has been using the Fed facilities,” said Bernard Connolly, global strategist at Banque AIG.
The Fed is now spreading the net wider by allowing all US banks to use the Term Auction Facility, which offers secrecy and allows them to hand in a much wider set of investments as collateral to raise money, including mortgage securities. Perhaps some credit will at last reach those in urgent need.
